Data Analysis

Life Insurance Density and Penetration in India

The potential and performance of the Insurance sector is universally assessed with
reference to two parameters.
1. Insurance Density
2. Insurance Penetration
The measure of Life Insurance penetration and density reflects the level of
development of life insurance sector in a country

Market share based on premium and policies of public and private sector Life
insurance companies
The most important indicator to assess life insurers is the amount of premium
collected. The sum assured is fragmented into installments of premium. In other
words, premium is the fragmented value of the Sum Assured of policy, payable
continuously at regular intervals until the maturity of the policy. The total premium
consists of first year premium, Renewal Premium and Single Premium
The amount of premium otherwise called premium rate, depends on: Mortality
experience of insured lives Expenses incurred by the company in administrating
the life fund Yield on investments of life fund Besides these three, the premium
rates may also be affected by other factors namely interest rates and taxation rates

Market Share based on Total premium

YEAR

LIC

2004-05

97.99

PRIVATE
SECTOR
2.01

2005-06

95.29

4.71

2006-07

90.67

9.33

2007-08

85.76

14.24

2008-09

81.9

18.1

2009-10

74.4

25.6

2010-11

70.92

29.08

2011-12

69.64

30.36

2012-13

68.8

31.2

2013-14

66.93

33.07

100
90
80
70
60
50
40
30

LIC
PRIVATE SECTOR

20
10
0

The total premium of Life Insurance Corporation of India increased continuously

since 2000-01 to 2009-10.However a significant decline is noticed in market share

from 99.98% in 2000-01 to 70.10% in 2009-10. While in case of private sector, the
total premium income and market share of total premium have both increased. The
market share of private sector life insurance companies on the basis of total
premium has increased from 0.02% in 2000-01 to 29.90% in 2009-10. It reflects that
the private sector has been successful in capturing the market share from Life
Insurance Corporation of India. Due to stiff competition from the private players, Life
Insurance Corporation of India has lost nearly 30% market share based on total
premium. Life Insurance Corporation of India is still the market leader at present.

Market Share based on Total Policies

The life insurance contract provides elements of protection and investment. After
getting insured, the policy-holder feels a sense of protection because he shall be
paid a definite sum at death or maturity. Since a definite sum must be paid, the
element of investment is also present. In other words, life insurance provides 200001 2001-02 2002-03 2003-04 2004-05 2005-06 2006-07 2007-08 2008-09 2009-10
Market Share based on Renewal Premium Public Sector Private sector111 against
pre-mature death and a fixed sum at maturity of policy. The two elements of
protection and investment exist in various degrees in different types of policies. The
older the policy, the lesser the element of protection and higher the element of
investment and vice-versa is also true. Having different elements in different
policies, the policy-holders are free to choose the best policies according to their
requirements. It should be known that no one policy is the best policy for all the
policy-holders due to variance in cost, elements of investments and protection,
requirements of the policy-holders and availability of the policy. Life insurance
policies are divided on the basis of duration of policy, method of premium payments
and participation.

YEAR

PRIVATE
LIC

SECTOR

2004-05

96.75

3.25

2005-06

94.21

5.79

2006-07

91.48

8.52

2007-08

89.09

10.91

2008-09

82.83

17.17

2009-10

73.93

26.07

2010-11

70.52

29.48

2011-12

73.02

26.98

2012-13

70.2

29.8

2013-14

68.85

31.15

100
90
80
70
60
50
40
30

LIC
PRIVATE SECTOR

20
10
0

The market share of LIC of India was 99.23% in the year 2000-01.It has decreased
to 73.02% in the year 2009-10. While that of the private sector was 0.77% in the
year 2000-01 and increased to 26.98% in the year 2009-10. There are concerns
over Life Insurance Corporation of Indias declining market share based on total
policies and concurrent rise of private insurers who have just entered ten years ago.
Innovative products, smart marketing and aggressive distribution channels has
enabled private life insurance companies to sell policies. As of today, Life Insurance
Corporation of India has retained the market share based on total policies.

100

96.75

94.21

91.48

90

89.09
82.83
76.58

80

73.93

70.36

68.48

70

64.56

60
50

LIC

PRIVATE SECTOR

40
30

23.42

29.64

35.44

17.17

20
10

26.07

31.52

3.25

5.79

8.52

10.91

2004-05 2005-06 2006-07 2007-08 2008-09 2009-10 2010-11 2011-12 2012-13 2013-14

The market share of LIC of India was 96.75% in the year 200405.It has decreased to 64.56% in the year 2.13-14. While that of
the private sector was 3.25% in the year 2004-05 and increased
to 35.44% in the year 2013-14. There are concerns over Life
Insurance Corporation of Indias declining market share based on
total policies and concurrent rise of private insurers who have just
entered ten years ago. Innovative products, smart marketing

and aggressive distribution channels has enabled private life

insurance companies to sell policies. As of today, Life Insurance
Corporation of India has retained the market share based on total
policies.